Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 2 30/05/17 dr inż. Mateusz Molasy 1 CREATIVITY KNOWLEDGE AGE POSITIVE OUTLOOK COGNIT...
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Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 2
CREATIVITY
30/05/17
INNOVATION
The process of imagining and developing something new
The factors of creativity: KNOWLEDGE
AGE
POSITIVE OUTLOOK
WORKING MEMORY AND SUSTAINED ATTENTION
SELF-ESTEEM
“ROGUE” BEHAVIOR AND AVOIDING CONFORMITY
COGNITIVE FLEXIBILITY
MINDFULNESS
INNOVATION AS MANAGEMENT PROCESS
Thomas Edison realized that: • technology push and demand pull need to be mobilized • innovation is more than simply coming up with good ideas – it is the process of growing them into practical use
The process of implementing new ideas
Innovative firms outperform their competitors, measured in terms of market share, profitability, growth or market capitalization, but it requires a different set of management knowledge and skills from those of everyday business administration
WHY BOTHER MANAGING FOR INNOVATIONS? SPOTTING OPPORTUNITIES
TAKING ADVANTAGE OF THEM
ABILITY TO SEE CONNECTIONS
INNOVATIONS
WHY BOTHER MANAGING FOR INNOVATIONS?
Innovative firms outperform their competitors in terms of market share, profitability, growth or market capitalization
dr inż. Mateusz Molasy
Innovation requires a different set of management knowledge and skills from those of everyday business administration
4PS OF INNOVATION
PRODUCT INNOVATION
PROCESS INNOVATION
POSITION INNOVATION
PARADIGM INNOVATION
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Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 2
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DIMENSIONS OF INNOVATION
INNOVATION SPACE
Source: Tidd, Bessant, 2013
VARIATIONS ON A THEME SECTOR
Source: Tidd, Bessant, 2013
VARIATIONS ON A THEME Different sectors have different priorities and characteristics
SIZE
SECTOR
SIZE
REGIONAL/NATIONAL SYSTEMS
REGIONAL/NATIONAL SYSTEMS
NETWORKS
NETWORKS
PROJECT-BASED ORGANIZATIONS
PROJECT-BASED ORGANIZATIONS
DO BETTER/ DO DIFFERENT
DO BETTER/ DO DIFFERENT
VARIATIONS ON A THEME
VARIATIONS ON A THEME
SECTOR
SIZE
REGIONAL/NATIONAL SYSTEMS
NETWORKS PROJECT-BASED ORGANIZATIONS DO BETTER/ DO DIFFERENT
dr inż. Mateusz Molasy
• Smaller organizations possess a range of advantages – such as agility, rapid decisionmaking • Bigger organizations has more resources
SECTOR
In some cases there is clear synergy between the range actors (government, financial, educational, labor market, science and technology infrastructure) which create the supportive conditions within which innovation can flourish
SIZE
REGIONAL/NATIONAL SYSTEMS
NETWORKS PROJECT-BASED ORGANIZATIONS
Organizations of different shapes and sizes work together in networks – regional clusters, supply chains, product development consortia, strategic alliances
DO BETTER/ DO DIFFERENT
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Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 2
VARIATIONS ON A THEME
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VARIATIONS ON A THEME
SECTOR
SECTOR
SIZE
SIZE
REGIONAL/NATIONAL SYSTEMS
NETWORKS PROJECT-BASED ORGANIZATIONS
REGIONAL/NATIONAL SYSTEMS
Project organization involves a system which brings together many different elements into an integrated whole
DO BETTER/ DO DIFFERENT
NETWORKS PROJECT-BASED ORGANIZATIONS DO BETTER/ DO DIFFERENT
CAN WE MANAGE INNOVATIONS?
The structures and behaviors needed to help enable incremental improvements will tend to be incorporated into the day-to-day standard operating procedures of the organization
CAN WE MANAGE INNOVATIONS? Some organizations which have survived for an extended period of time have learned how to manage the process of innovation
Problems with managing innovations: • developing and refining new basic knowledge • adapting and applying it to new products and processes • convincing others to support and adopt the innovation • gaining acceptance and long-term use, and so on
Organizations developed particular ways of behaving which become ‘the way we do things around here’. These patterns form part of the organization’s culture They emerge as a result of repeated experiments and experience around what appears to work well – in other words, they are learned Over time the pattern becomes more of an automatic response to particular situations, and they became a ‘routine’ Successful innovation management is about building and improving effective routines Routines represent particular ‘personality’ of the firm and they must be learned. Copying them is unlikely to help
INNOVATION PROCESS MODEL
Source: Tidd, Bessant, 2013
dr inż. Mateusz Molasy
Source: Tidd, Bessant, 2013
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Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 2
INNOVATION PROCESS MODEL Detecting signals about potential change in the environment: new technological opportunities, changing requirements on the part of markets, legislative pressure, competitor action... Understanding of what factors shape the ‘selection environment’ Having well-developed mechanisms for identifying, processing and selecting information Being sure that space is thoroughly explored
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ENABLING EFFECTIVE SEARCH DEFINING THE BOUNDARIES OF THE MARKETPLACE
UNDERSTANDING MARKET DYNAMICS
‘TRENDSPOTTING’
MONITORING TECHNOLOGICAL TRENDS
MARKET FORECASTING
TECHNOLOGICAL FORECASTING
INTEGRATED FUTURE SEARCH
LEARNING FROM OTHERS
INVOLVING STAKEHOLDERS
INVOLVING INSIDERS
‘MISTAKES MANAGEMENT’
COMMUNICATION AND CONNECTION
• ‘What business are we in?’: current / potential markets • Looking for new opportunities
Source: Tidd, Bessant, 2013
ENABLING EFFECTIVE SEARCH
ENABLING EFFECTIVE SEARCH
DEFINING THE BOUNDARIES OF THE MARKETPLACE
UNDERSTANDING MARKET DYNAMICS
‘TRENDSPOTTING’
MONITORING TECHNOLOGICAL TRENDS
DEFINING THE BOUNDARIES OF THE MARKETPLACE
UNDERSTANDING MARKET DYNAMICS
‘TRENDSPOTTING’
MONITORING TECHNOLOGICAL TRENDS
MARKET FORECASTING
TECHNOLOGICAL FORECASTING
INTEGRATED FUTURE SEARCH
LEARNING FROM OTHERS
MARKET FORECASTING
TECHNOLOGICAL FORECASTING
INTEGRATED FUTURE SEARCH
LEARNING FROM OTHERS
INVOLVING STAKEHOLDERS
INVOLVING INSIDERS
‘MISTAKES MANAGEMENT’
COMMUNICATION AND CONNECTION
INVOLVING STAKEHOLDERS
INVOLVING INSIDERS
‘MISTAKES MANAGEMENT’
COMMUNICATION AND CONNECTION
Understanding where potential markets may arise as a consequence of various kinds of change
ENABLING EFFECTIVE SEARCH
Developing a system to pick up on the early warning of trends
ENABLING EFFECTIVE SEARCH
DEFINING THE BOUNDARIES OF THE MARKETPLACE
UNDERSTANDING MARKET DYNAMICS
‘TRENDSPOTTING’
MONITORING TECHNOLOGICAL TRENDS
DEFINING THE BOUNDARIES OF THE MARKETPLACE
UNDERSTANDING MARKET DYNAMICS
‘TRENDSPOTTING’
MONITORING TECHNOLOGICAL TRENDS
MARKET FORECASTING
TECHNOLOGICAL FORECASTING
INTEGRATED FUTURE SEARCH
LEARNING FROM OTHERS
MARKET FORECASTING
TECHNOLOGICAL FORECASTING
INTEGRATED FUTURE SEARCH
LEARNING FROM OTHERS
INVOLVING STAKEHOLDERS
INVOLVING INSIDERS
‘MISTAKES MANAGEMENT’
COMMUNICATION AND CONNECTION
INVOLVING STAKEHOLDERS
INVOLVING INSIDERS
‘MISTAKES MANAGEMENT’
COMMUNICATION AND CONNECTION
Identification of emerging trends in technologies requires active search ad scanning at the periphery (suppliers, universities, research/technology institutions, other users and producers, trade associations…)
dr inż. Mateusz Molasy
Forecasting needs to move beyond sales-related information to include other features which will influence the potential market (demographic, technological, political, environmental issues...)
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Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 2
ENABLING EFFECTIVE SEARCH
30/05/17
ENABLING EFFECTIVE SEARCH
DEFINING THE BOUNDARIES OF THE MARKETPLACE
UNDERSTANDING MARKET DYNAMICS
‘TRENDSPOTTING’
MONITORING TECHNOLOGICAL TRENDS
DEFINING THE BOUNDARIES OF THE MARKETPLACE
UNDERSTANDING MARKET DYNAMICS
‘TRENDSPOTTING’
MONITORING TECHNOLOGICAL TRENDS
MARKET FORECASTING
TECHNOLOGICAL FORECASTING
INTEGRATED FUTURE SEARCH
LEARNING FROM OTHERS
MARKET FORECASTING
TECHNOLOGICAL FORECASTING
INTEGRATED FUTURE SEARCH
LEARNING FROM OTHERS
INVOLVING STAKEHOLDERS
INVOLVING INSIDERS
‘MISTAKES MANAGEMENT’
COMMUNICATION AND CONNECTION
INVOLVING STAKEHOLDERS
INVOLVING INSIDERS
‘MISTAKES MANAGEMENT’
COMMUNICATION AND CONNECTION
Techniques from simple extrapolation of performance parameters and rates of development to complex, non-linear techniques
ENABLING EFFECTIVE SEARCH
The work with scenarios where a number of people work together to build up pictures of alternative parallel futures
ENABLING EFFECTIVE SEARCH
DEFINING THE BOUNDARIES OF THE MARKETPLACE
UNDERSTANDING MARKET DYNAMICS
‘TRENDSPOTTING’
MONITORING TECHNOLOGICAL TRENDS
DEFINING THE BOUNDARIES OF THE MARKETPLACE
UNDERSTANDING MARKET DYNAMICS
‘TRENDSPOTTING’
MONITORING TECHNOLOGICAL TRENDS
MARKET FORECASTING
TECHNOLOGICAL FORECASTING
INTEGRATED FUTURE SEARCH
LEARNING FROM OTHERS
MARKET FORECASTING
TECHNOLOGICAL FORECASTING
INTEGRATED FUTURE SEARCH
LEARNING FROM OTHERS
INVOLVING STAKEHOLDERS
INVOLVING INSIDERS
‘MISTAKES MANAGEMENT’
COMMUNICATION AND CONNECTION
INVOLVING STAKEHOLDERS
INVOLVING INSIDERS
‘MISTAKES MANAGEMENT’
COMMUNICATION AND CONNECTION
Strategies based on ‘copy and develop’ can be used, also the concept of benchmarking
ENABLING EFFECTIVE SEARCH
Involving customers in providing information about kinds of products and services which they require can be done through surveys, customer panels, working with lead users…
ENABLING EFFECTIVE SEARCH
DEFINING THE BOUNDARIES OF THE MARKETPLACE
UNDERSTANDING MARKET DYNAMICS
‘TRENDSPOTTING’
MONITORING TECHNOLOGICAL TRENDS
DEFINING THE BOUNDARIES OF THE MARKETPLACE
UNDERSTANDING MARKET DYNAMICS
‘TRENDSPOTTING’
MONITORING TECHNOLOGICAL TRENDS
MARKET FORECASTING
TECHNOLOGICAL FORECASTING
INTEGRATED FUTURE SEARCH
LEARNING FROM OTHERS
MARKET FORECASTING
TECHNOLOGICAL FORECASTING
INTEGRATED FUTURE SEARCH
LEARNING FROM OTHERS
INVOLVING STAKEHOLDERS
INVOLVING INSIDERS
‘MISTAKES MANAGEMENT’
COMMUNICATION AND CONNECTION
INVOLVING STAKEHOLDERS
INVOLVING INSIDERS
‘MISTAKES MANAGEMENT’
COMMUNICATION AND CONNECTION
Bringing different communities of practice together across organization, discovering innovations lying in the minds and experiences of existing employees
dr inż. Mateusz Molasy
Mistakes and apparent failures may open up completely new directions for innovation, but quite often reframing from a planned direction is needed
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Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 2
ENABLING EFFECTIVE SEARCH DEFINING THE BOUNDARIES OF THE MARKETPLACE
UNDERSTANDING MARKET DYNAMICS
‘TRENDSPOTTING’
MONITORING TECHNOLOGICAL TRENDS
MARKET FORECASTING
TECHNOLOGICAL FORECASTING
INTEGRATED FUTURE SEARCH
LEARNING FROM OTHERS
INVOLVING STAKEHOLDERS
INVOLVING INSIDERS
‘MISTAKES MANAGEMENT’
COMMUNICATION AND CONNECTION
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INNOVATION PROCESS MODEL Understanding the key parameters of the competitive game and the role of the technological knowledge as a resource Resolving inputs into an innovation concept which can be progressed further: • The flow of signals about possible technological and market opportunities available to the enterprise • The current technological base – firm’s distinctive technological competence • The fit with the overall business
User perspective has to be communicated to all different functions and disciplines with the organization
Source: Tidd, Bessant, 2013
ENABLING STRATEGY MAKING STRATEGIC ANALYSIS
STRATEGIC CHOICE
ENABLING STRATEGY MAKING STRATEGIC MONITORING
• Organizations which innovate on impulse are poor performers • The innovations should help the organization to reach the strategic goals • Strategic analysis need to be communicated and shared
STRATEGIC CHOICE Portfolio management approaches
• BENEFIT MEASUREMENT TECHNIQUES: based on relatively simple subjective judgments, may include some kind of scoring or weighing; consider each project in relative isolation • ECONOMIC MODELS: attempt to put some financial or other quantitative data into the equation
STRATEGIC ANALYSIS
STRATEGIC CHOICE
STRATEGIC MONITORING
Portfolio management approaches
Building a business case
Building coalitions
STRATEGIC CHOICE Building a business case
The purpose: move an outline idea to something with clearer shape and form, on which decisions about resource commitments can be made Concept can be tested in the marketplace Helping tools include simulation and prototyping, advanced computer modeling…
• PORTFOLIO MODELS: deal with the issue of reviewing across a set of projects and look for balance
dr inż. Mateusz Molasy
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Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 2
ENABLING STRATEGY MAKING
STRATEGIC CHOICE Building coalitions
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Important routine is to bring suppliers of components and sub-systems into the discussion to save cost and time Concept testing can be helped in order to secure acceptance and in obtaining improved quality process design
INNOVATION PROCESS MODEL Turning potential ideas into reality
STRATEGIC ANALYSIS
STRATEGIC CHOICE
STRATEGIC MONITORING
There is a need to maintain the strategic review throughout the life of a project, monitoring against the original criteria but taking into account the way in which the project and its wider environment changes
INNOVATION PROCESS MODEL Combining new and existing knowledge to offer a solution to the problem of innovation
Pulling together different pieces of knowledge and putting them into an innovation Uncertainty is replaced by knowledge acquired through various routes
Source: Tidd, Bessant, 2013
ENABLING EFFECTIVE KNOWLEDGE ACQUISITION Requires organizational routines, including clear strategic direction, effective communication and integration of effort across different groups
EFFECTIVE MANAGEMENT OF R&D
For many smaller firms the challenge is to find ways of using technology generated by others
Source: Tidd, Bessant, 2013
ENABLING EFFECTIVE KNOWLEDGE ACQUISITION BASE TECHNOLOGIES
KEY TECHNOLOGIES
KEY GROUPS OF TECHNOLOGICAL KNOWLEDGE PACING TECHNOLOGIES
EMERGING TECHNOLOGIES
The abilities in finding, selecting and transferring technology in from outside the firm are required
dr inż. Mateusz Molasy
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Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 2
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THE DEVELOPMENT FUNNEL BY WHEELWRIGHT & CLARK
INNOVATION PROCESS MODEL Moving from idea through to successful products, services or processes
Source: Tidd, Bessant, 2013
Source: Tidd, Bessant, 2013
‘STAGE GATES’ PROCESS BY COOPER
INNOVATION PROCESS MODEL
Source: Tidd, Bessant, 2013
The process of identifying, exploring and preparing the market for launch of a new product or service + the creation of new stimuli for restarting the cycle
LAUNCH Customer Testing
LAUNCH Test Marketing
Develop a Marketing Strategy
Taking out prototypes of the product to users
Develop a Marketing Plan
Source: Tidd, Bessant, 2013
Develop a Support Organization
dr inż. Mateusz Molasy
Customer Testing
Test Marketing
Develop a Marketing Strategy
Involves various kinds of trying out of the marketing strategy
Launching into an Internal Market
Develop a Marketing Plan
Develop a Support Organization
Launching into an Internal Market
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Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 2
LAUNCH Customer Testing
LAUNCH Test Marketing
Develop a Marketing Strategy
Involves a mixture of analysis of the target market and the relevant strengths, weaknesses, threats and opportunities
Develop a Marketing Plan
Develop a Support Organization
Launching into an Internal Market
LAUNCH Customer Testing
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Customer Testing
A formal documented plan covering objectives, strategies and programs to underpin the product launch
Develop a Marketing Plan
Develop a Support Organization
Launching into an Internal Market
Test Marketing
Develop a Marketing Strategy
LAUNCH Test Marketing
Develop a Marketing Strategy
Customer Testing
As internal market often involves the same people this raises the question of change management
Linking with external channels of distribution and promotion
Develop a Marketing Plan
Develop a Marketing Strategy
Test Marketing
Develop a Support Organization
Launching into an Internal Market
INNOVATION PROCESS MODEL
Develop a Marketing Plan
Develop a Support Organization
Launching into an Internal Market
EFFECTIVE LEARNING Effective learning includes accumulating technological knowledge and knowledge about how to manage the innovation process Model of learning cycle requires: • Structured and challenging reflection on the process • Conceptualizing • Experimentation
One of review of the completed project and an attempt to capture learning from the experience
Forgetting old patterns of behaviors is unlearning
Source: Tidd, Bessant, 2013
dr inż. Mateusz Molasy
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DIFFERENT INNOVATION MANAGEMENT ARCHETYPES
APPROPRIATING THE BENEFITS FROM INNOVATION
The central to presented model is the idea of learning through trial and error to build effective routines which can help improve the chances of successful innovation
The capacity of the firm to appropriate the benefits of its investment in innovation depends on two factors:
Discontinuous nature of innovations also need to be taken into account. That’s why organization needs also a different set of routines – not to use instead of but as well as those we have developed for ‘steady-state’ conditions
• Capacity to defend its advantage against imitators
• Capacity to translate its technological advantage into commercially viable products or processes
For this is needed observing some of basic elements of the complementary routines which are associated with successful innovation management under discontinuous conditions – often found in entrepreneurial firms
APPROPRIATING THE BENEFITS FROM INNOVATION
APPROPRIATING THE BENEFITS FROM INNOVATION
Secrecy
Secrecy
Accumulated tacit knowledge Lead times & after-sales service The learning curve
An effective form of protection by industrial managers, especially for process innovations, but it is unlikely to provide absolute protection by secrecy
Accumulated tacit knowledge Lead times & after-sales service The learning curve
Can protect better, because it is difficult to imitate, especially when it is closely integrated in specific firms and regions
Complementary assets
Complementary assets
Product complexity
Product complexity
Standards
Standards
Pioneering radical new products
Pioneering radical new products
Strength of patent protection
Strength of patent protection
APPROPRIATING THE BENEFITS FROM INNOVATION
APPROPRIATING THE BENEFITS FROM INNOVATION
Secrecy
Secrecy
Accumulated tacit knowledge Lead times & after-sales service The learning curve Complementary assets
Accumulated tacit knowledge Major source of protection against imitation, especially for product innovations. Together with strong commitment to product development can increase the cost of entry for imitators
Lead times & after-sales service The learning curve Complementary assets
Product complexity
Product complexity
Standards
Standards
Pioneering radical new products
Pioneering radical new products
Strength of patent protection
Strength of patent protection
dr inż. Mateusz Molasy
In production generates lower costs and a form of accumulated and largely tacit knowledge that is well recognized by practitioners
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Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 2
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APPROPRIATING THE BENEFITS FROM INNOVATION
APPROPRIATING THE BENEFITS FROM INNOVATION
Secrecy
Secrecy
Accumulated tacit knowledge
Accumulated tacit knowledge
Lead times & after-sales service
Lead times & after-sales service
The learning curve Complementary assets Product complexity Standards
The effective commercialization of an innovation very often depends on assets in production, marketing and after-sales to complement those in technology
The learning curve Complementary assets Product complexity
An effective barrier to imitation
Standards
Pioneering radical new products
Pioneering radical new products
Strength of patent protection
Strength of patent protection
APPROPRIATING THE BENEFITS FROM INNOVATION
CASES OF STANDARDIZATION AND PIONEERING TECHNOLOGY
Secrecy Accumulated tacit knowledge Lead times & after-sales service The learning curve Complementary assets Product complexity Standards Pioneering radical new products Strength of patent protection
• The market leader normally has the advantage in a standards war, but this can be overturned through radical technological change, or a superior response to customers’ needs • It can be cheaper for every player on the market to avoid standard wars • Firm level and environmental factors influences standardssetting Source: Bessant, Tidd, 2013
APPROPRIATING THE BENEFITS FROM INNOVATION
APPROPRIATING THE BENEFITS FROM INNOVATION
Secrecy
Secrecy
Accumulated tacit knowledge Lead times & after-sales service The learning curve Complementary assets Product complexity Standards Pioneering radical new products Strength of patent protection
dr inż. Mateusz Molasy
Accumulated tacit knowledge • The success of product pioneers ranges between 25% (for consumer products) and 53% (for higher technology products), depending on the technological and market conditions • Pioneer strategy appears more successful in markets where the purchasing frequency is high, or distribution important
Lead times & after-sales service The learning curve Complementary assets Product complexity Standards Pioneering radical new products Strength of patent protection
• A strong determinant of the relative commercial benefits to innovators and imitators • Usually more effective in protecting product innovations than process innovations
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Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 2
INNOVATIVENESS IS SUPPORTED BY FACTORS
ORGANIZATIONAL STRUCTURE
ROLES PLAYED BY KEY INDIVIDUALS
TRAINING AND DEVELOPMENT OF STAFF
THE WAY IN WHICH WORK IS ORGANIZED
THE EXTENT TO WHICH PEOPLE ARE INVOLVED IN INNOVATION
HOW THE ORGANIZATION ITSELF GOES ABOUT LEARNING AND SHARING KNOWLEDGE
TOP MANAGEMENT COMMITMENT
‘Innovation has nothing to do with how many R&D dollars you have... It’s not about money. It’s about the people you have, how you’re led, and how much you get it.’ (Steve Jobs, interview with Fortune Magazine, 1998)
Every human being comes with the capability to find and solve complex problems Where such creative behavior can be harnessed amongst a group of people with differing skills and perspectives extraordinary things can be achieved
APPROPRIATE ORGANIZATION STRUCTURE
Long-term commitment to major projects
Seeking shortterm returns
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Organizational structures are influenced by the nature of tasks to be performed within the organization: the less programmed and more uncertain the tasks, the greater the need for flexibility around the structuring of relationships
Long-term technology development plan s Considering futur e market penetratio n and growth Demands for shor tterm gains by shareholders
Top management acceptance of risk
APPROPRIATE ORGANIZATION STRUCTURE
KEY INDIVIDUALS
‘ORGANIC’ ORGANIZATIONS
‘MECHANISTIC’ ORGANIZATIONS
Essentially environments suited to conditions of rapid change
More suited to stable conditions
SIZE
INNOVATIVE ACTIVITIES REQUIRE FLEXIBILITY AND EXTENSIVE INTERACTION
AGE
Key individual – a person (or a group of people) who is prepared to make innovations to the outside world and to provide some energy and enthusiasm to help it through the organizational system
COMPANY STRATEGY
KEY CHALLENGE = GETTING THE MOST APPROPRIATE STRUCTURAL FORM FOR THE PARTICULAR CIRCUMSTANCES IF THERE IS GOOD ‘FIT’, STRUCTURE WILL ENABLE AND REINFORCE INNOVATIVE BEHAVIOR
dr inż. Mateusz Molasy
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Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 2
ROLES OF KEY INDIVIDUALS
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ROLES OF KEY INDIVIDUALS
Source of critical technical knowledge
Organizational sponsor
Team members and team leader
Source of critical technical knowledge
Organizational sponsor
Team members and team leader
Business innovator
Project killer
Technological gate-keeper
Business innovator
Project killer
Technological gate-keeper
• Have the breadth of understanding of the technology behind the innovation and the ability to solve the many development problems • Involves motivation and commitment
ROLES OF KEY INDIVIDUALS
Has power and influence and is able to pull the various strings of the organization
ROLES OF KEY INDIVIDUALS
Source of critical technical knowledge
Organizational sponsor
Team members and team leader
Source of critical technical knowledge
Organizational sponsor
Team members and team leader
Business innovator
Project killer
Technological gate-keeper
Business innovator
Project killer
Technological gate-keeper
• Deeply involved leaders that have organizational power to make sure things come together • Leaders whose involvement is weak
ROLES OF KEY INDIVIDUALS
Can represent and bring to bear the broader market or user perspective
ROLES OF KEY INDIVIDUALS
Source of critical technical knowledge
Organizational sponsor
Team members and team leader
Source of critical technical knowledge
Organizational sponsor
Team members and team leader
Business innovator
Project killer
Technological gate-keeper
Business innovator
Project killer
Technological gate-keeper
Has negative influence on the outcome of an innovation project
dr inż. Mateusz Molasy
Collects information from various sources and passes it on to the relevant people who will be best able or most interested to use it
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Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 2
TRAINING & DEVELOPMENT The ability of organization to make: - the best use of new equipment - to produce products and services with novelty in design, quality or performance
DEPENS ON THE KNOWLEDGE AND SKILLS OF PEOPLE INVOLVED IN PRODUCING INNOVATIONS
HIGH INVOLVEMENT IN INNOVATION (HII) Creative skills and problem-solving abilities are possessed by everyone. There is enormous innovative potential if there can be found a mechanism to focus such abilities on a regular basis across the entire company It has been proven that higher levels of participation in innovation represents a competitive advantage, enhances performance Involvement of employees in ‘High involvement innovation’ programs may provide a powerful aid to effective management of change
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TRAINING & DEVELOPMENT Motivates employees People value the experience of acquiring new skills and abilities, feel valuable as part of the organization Enables to take on more responsibility and demonstrate more initiative Is valuable as part of a wider change program Training in the sense of ‘know-how’ and the strategic rationale for the change (the ‘know-why’) can provide a powerful support for innovation programs Develop the habit of learning The continual discovery and sharing of new knowledge a continuing and shared learning process; requires that employees understand how to learn
HIGH INVOLVEMENT IN INNOVATION (HII)
• • • •
Little or no HII activity Problem-solving random No formal efforts or structure Occasional bursts punctuated by inactivity and non-participation • Dominant mode of problemsolving is by specialists • Short-term benefits • No strategic impact
Source: Tidd, Bessant, 2013
HIGH INVOLVEMENT IN INNOVATION (HII)
Establishing the habit of HII within at least part of the organization, involves setting up a formal processes for finding and solving problems in a structured and systematic way, training and encouraging people in basic HII tools
Source: Tidd, Bessant, 2013
dr inż. Mateusz Molasy
HIGH INVOLVEMENT IN INNOVATION (HII)
• Involves incorporating the HII habit to the strategic goals of the organization • Two key behaviors need to be added to the basic suite: those of strategy deployment and of monitoring and measuring • HII makes now a significant impact on the bottom line
Source: Tidd, Bessant, 2013
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HIGH INVOLVEMENT IN INNOVATION (HII)
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HIGH INVOLVEMENT IN INNOVATION (HII) • HII as the dominant way of life • Automatic capture and sharing of learning • Everyone actively involved in innovation process Incremental and radical innovation
‘Empowerment’ of individuals and groups to experiment and innovate on their own initiative – everyone is a researcher and knowledge is widely shared and used
Source: Tidd, Bessant, 2013
Source: Tidd, Bessant, 2013
EFFECTIVE TEAM WORKING
EFFECTIVE TEAM WORKING
Groups offers more than individuals in terms of fluency of idea generation and in flexibility of solutions developed – high level of team working is the prime driver in innovation tasks
Teams provide achieving decentralized and agile operating structure – self-managed teams working within a defined area of autonomy can be very effective
Teams can help crossing internal borders within the organization bringing together the different knowledge sets needed for tasks like product development or process improvement
CHARACTERISTICS PROMOTING EFFECTIVE TEAM WORK A CLEAR, COMMON AND ELEVATING GOAL
RESULT-DRIVEN STRUCTURE
COMPETENT TEAM-MEMBERS
UNIFIED COMMITMENT
COLLABORATIVE CLIMATE
STANDARDS OF EXCELLENCE
EXTERNAL SUPPORT AND RECOGNITION
PRINCIPLED LEADERSHIP
APPROPRIATE USE OF THE TEAM
PARTICIPATION IN DECISION MAKING
TEAM SPIRIT
EMBRACING APPROPRIATE CHANGE
dr inż. Mateusz Molasy
Key elements in effective high performance team working include: • Clearly defined tasks and objectives • Effective team leadership • Good balance of team roles and match to individual behavioral style • Effective conflict resolution mechanisms within the group • Continuing connection with external organization
CREATIVE CLIMATE PEOPLE’S STYLE OF EXPRESSING CREATIVITY
High-performance project teams for innovative tasks are result of a combination of selection and investment in teambuilding, clear guidance on their roles and tasks, a concentration on managing group process and task aspects
Ideas which challenge the whole way in which the universe works
May require a significant creative leap
Ideas about how to improve the jobs they do or their working environment in small incremental steps
Involve many of small problemfinding and solving exercises
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CREATIVE CLIMATE ARTIFACTS
BELIEFS AND VALUES
EXTERNAL FOCUS
Providing models and reinforcing preferred styles of behavior by changing structures or processes
Long-established characteristic of successful innovating organizations are those which are essentially open to new stimuli from outside
One of important issues in the design of effective reward system – it should encourage the development of new ideas and reward creative behaviors
Developing a sense of external orientation and ensuring that this fill organizational thinking at all levels are of considerable importance in building an innovative organization
Internal entrepreneurship is also worth highlighting – in organizations with a supportive and innovative culture, individuals with bright ideas should progress them with support and encouragement for the system
UNDERLYING ASSUMPTIONS
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By developing a widespread awareness of customers (internal and external) quality and innovation can be improved
EXTENSIVE COMMUNICATION
DIFFERENCES IN SOURCES AND DIRECTIONS OF TECHNOLOGICAL CHANGE
Mechanisms for enhancing communication include:
Size of innovating firms
• job rotation and secondment • cross-functional teams and projects • policy-deployment and review sessions • team briefings • multiple media – video, notice boards, e-mail, intranets, etc.
• BIG: chemicals, road vehicles, material processing • SMALL: machinery, instruments, software
Type of product made • PRICE SENSITIVE: bulk materials, consumer products • PERFORMANCE SENSITIVE: ethical drugs, machinery
Objects of innovation • PRODUCT INNOVATION: ethical drugs, machinery • PROCESS INNOVATION: steel
Sources of innovation • SUPPLIERS OF EQUIPMENT: agriculture, textiles • CUSTOMERS: instrument • MACHINERY: software • IN-HOUSE TECHNOLOGICAL ACTIVITIES: chemicals, electronics, transport, machinery, software • BASIC RESEARCH: ethical drugs
Locus of own innovation • R&D LABORATORIES: chemicals, electronics • PRODUCTION ENGINEERING DEPARTMENTS: automobiles, bulk materials • DESIGN OFFICES: machine-building • SYSTEM DEPARTMENTS: service industries
MAJOR TECHNOLOGICAL TRAJECTORIES Supplier-dominated Scale-intensive Science-based Information-intensive Specialized suppliers
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• Where do the company’s technologies come from? • How do they contribute to compe&&ve advantage? • What are the major tasks of innova&on strategy? • Where are the likely opportuni&es and threats, and how can they be dealt with?
MAJOR TECHNOLOGICAL TRAJECTORIES Supplier-dominated Scale-intensive Science-based
• Technical change comes from suppliers of machinery and other production inputs • The main task of innovation strategy: to use technology from elsewhere to reinforce other competitive advantages
Information-intensive Specialized suppliers
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MAJOR TECHNOLOGICAL TRAJECTORIES Supplier-dominated Scale-intensive Science-based Information-intensive Specialized suppliers
• Technological accumulation is generated by the design, building and operation of complex production systems and/or products • The main task of innovation strategy: the incremental improvement of technological improvements in complex products or production systems, the diffusion throughout the firm of best-practice methods in design and production
MAJOR TECHNOLOGICAL TRAJECTORIES Supplier-dominated Scale-intensive Science-based Information-intensive Specialized suppliers
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MAJOR TECHNOLOGICAL TRAJECTORIES Supplier-dominated Scale-intensive Science-based Information-intensive Specialized suppliers
• Technological accumulation emerges mainly from corporate R&D laboratories • The main task of innovation strategy: to monitor and exploit advances emerging from basic research, to develop technologically related products and acquire the complementary assets, to exploit them, to reconfigure the operating divisions and business units in the light of changing technological and market opportunities
MAJOR TECHNOLOGICAL TRAJECTORIES Supplier-dominated
• Main sources of technology: in-house software, systems departments, suppliers of IT hardware, system, applications software • The main task of innovation strategy: the development and operation of complex information processing systems, and the development of related and often radically new services
REVOLUTIONARY TECHNOLOGIES
Scale-intensive Science-based Information-intensive Specialized suppliers
• Main sources of technology: through the design, building and operational use of specialized inputs • The main task of innovation strategy: keeping up with users’ needs, learning from advanced users and matching new technologies to users’ needs
SMALL AND MEDIUM-SIZED INNOVATIVE ENTERPRISES The frequency of innovation in firms with fewer than 100 employees is much lower than in larger firms
BIOTECHNOLOGY
IT
MATERIALS
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The microelectronics revolution is about designing and producing electronic chips, and the IT revolution about producing software
Small and medium-sized firms rely more on informal R&D, they make less frequent use of outside sources of knowledge, for their innovations they depend more on their suppliers of machinery and materials According to survey in Canada only 9,3% of small and medium-sized firms performed their own R&D, 10,4% introduced their product innovations and 5,4% their own process innovations
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SMALL AND MEDIUM-SIZED INNOVATIVE ENTERPRISES SUPERSTARS
SPECIALIZED SUPPLIERS
SUPPLIER -DOMINATED
NEW TECHNOLOGY -BASED FIRMS (NTBFs)
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SMALL AND MEDIUM-SIZED INNOVATIVE ENTERPRISES SUPERSTARS
• Sources of competitive advantage: successful exploitation of major invention or technological trajectory • Main tasks of innovation strategy: Preparing replacements for the original invention (or inventor)
SPECIALIZED SUPPLIERS
SUPPLIER -DOMINATED
SUPPLIER -DOMINATED
NEW TECHNOLOGY -BASED FIRMS (NTBFs)
• Sources of competitive advantage: combining technologies to meet users’ needs • Main tasks of innovation strategy: links to advanced users and pervasive technologies
SMALL AND MEDIUM-SIZED INNOVATIVE ENTERPRISES SUPERSTARS
SPECIALIZED SUPPLIERS
NEW TECHNOLOGY -BASED FIRMS (NTBFs)
• Sources of competitive advantage: integration and adaptation of innovations by suppliers • Main tasks of innovation strategy: exploiting new IT-based opportunities in design, distribution and co-ordination
SOURCES OF NEW TECHNOLOGY-BASED FIRMS Many of NTBFs originated from a parent or ‘incubator’ organization, typically either an academic institution or large well-established firm
SMALL AND MEDIUM-SIZED INNOVATIVE ENTERPRISES SUPERSTARS
SPECIALIZED SUPPLIERS
SUPPLIER -DOMINATED
NEW TECHNOLOGY -BASED FIRMS (NTBFs)
• Sources of competitive advantage: product or process development in fastmoving and specialized area, privatizing academic research • Main tasks of innovation strategy: ‘superstar’ or ‘specialized supplier’, knowledge or money
CHARACTERISTICS OF INNOVATIVE ACTIVITIES OF SMES ACROSS SECTORS They are more likely to involve product innovation than process innovation The are focused on products for niche markets, rather than mass markets
NTBF spin-offs tend to remain close to their ‘parents’ for a technical and personal reasons: they retain contacts with their ‘parent’ organizations to gain financial and technical support
They will be more common amongst producers of final products, rather than producers of components They will frequently involve some form of external linkage
The barriers to entry for NTBFs are higher than for many other businesses, in terms of expertise and capital – NTBFs which are able to overcome such barriers are more likely to survive
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They tend to be associated with growth in output and employment, but not necessarily profit
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GROWTH AND PERFORMANCE OF SMES
LOCATION
• Geographic closeness to similar firms and knowledge centers increases the likelihood of informal linkages and encourages the mobility of skilled labor across firms
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GROWTH AND PERFORMANCE OF SMES The environment in which SME operates: matters, influences the opportunity for innovation and the most appropriate strategy and processes for innovation Firm needs to consider two environmental factors: • Excludability (to what extent the NTBF can prevent or limit competition from incumbents who develop similar technology?)
SIZE
• Larger SMEs are associated with a greater reach of innovation-related linkages, with the introduction of more novel product or process innovations for international markets; • Smaller SMEs are more embedded in local networks, are more likely to be engaged in incremental innovations for the domestic market
STRATEGY OPTIONS FOR SMES
ATTACKER’S ADVANTAGE
Incumbent’s complementary assets contribute little or no value, and the start-up cannot prevent development by the incumbent
REPUTATION -BASED
IDEAS FACTORY
GREENFIELD
STRATEGY OPTIONS FOR SMES Incumbents control the complementary assets, but the firm cannot prevent competing technology development by the incumbents
• Complementary assets (to what extent do the complementary assets contribute to the value proposition of the technology?)
STRATEGY OPTIONS FOR SMES
ATTACKER’S ADVANTAGE
REPUTATION -BASED
IDEAS FACTORY
GREENFIELD
STRATEGY OPTIONS FOR SMES
ATTACKER’S ADVANTAGE
IDEAS FACTORY
ATTACKER’S ADVANTAGE
IDEAS FACTORY
REPUTATION -BASED
GREENFIELD
REPUTATION -BASED
GREENFIELD
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Incumbents control the necessary complementary assets, but the firm can preclude effective development of the technology by incumbents, co-operation is essential
Incumbents assets are unimportant and the firm can preclude effective imitation, there is the potential for the firm to dominate an emerging business
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FRAMEWORK FOR AN INNOVATION STRATEGY
PROFILE OF TECHNICAL ENTREPRENEUR
INNOVATIONS: • a major source of uncertainty and change in the environment • a major competitive resource within the firm
RATIONALIST
STRATEGY
INCREMENTALIST
Source: Tidd, Bessant, 2013
RATIONALIST STRATEGY
SWOT ANALYSIS
Influenced by military experience, where strategy consists of the following steps: Describe, understand and analyze the environment
Determine a course of action in the light of the analysis
STRENGTHS
WEAKNESSES
OPPORTUNITIES
THREATS
The corporate equivalent is SWOT – analysis of corporate strengths and weaknesses in the light of external opportunities and threats
STRENGTHS - What do you do well? - What internal resources do you have? - What advantages do you have over your competition? - Do you have strong research and development capabilities? - What other positive aspects, internal to your business offer you a competitive advantage?
WEAKNESSES - What factors that are within your control detract from your ability to obtain or maintain a competitive edge? - What areas need improvement to accomplish your objectives or compete with your strongest competitor? - What does your business lack? - Does your business have limited resources?
STRENGTHS - We are able to respond very quickly as we have no need for higher management approval - We are able to give really good customer care, as the current small amount of work means we have plenty of time to devote to customers - Our lead consultant has strong reputation in the market - We can change direction quickly if we find that something is not working
OPPORTUNITIES - What opportunities exist in your market or the environment that you can benefit from? - Is the perception of your business positive? - Has there been recent market growth or have there been other changes in the market the create an opportunity? - Is the opportunity ongoing, or is there just a window for it? - How critical is your timing?
THREATS - Who are your existing or potential competitors? - What factors beyond your control could place your business at risk? - What situations might threaten your marketing efforts? - Has there been a significant change in supplier prices or the availability of raw materials? - What about shifts in consumer behavior, the economy, or government regulations that could reduce your sales?
OPPORTUNITIES - Our business sector is expanding, with many future opportunities for success - Local government wants to encourage local businesses - Our competitors may be slow to adopt new technologies
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Internal to the company, can be changed over time
Carry out the decided course of action
External to the company, can’t be changed
WEAKNESSES - Our company has little market presence or reputation - We are vulnerable to vital staff being sick, and leaving - Our cash flow will be unreliable in the early stages
THREATS - Developments in technology may change this market beyond our ability to adapt - A small change in the focus of a large competitor might wipe out any market position we achieve
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INCREMENTALIST STRATEGY
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INCREMENTALIST STRATEGY
This strategy recognizes that the firm has only very imperfect knowledge of its environment, of its own strengths and weaknesses, and of the likely rates and directions of change in the future It must therefore be ready to adapt its strategy in the light of new information and understanding which it must consciously seek to obtain
INCREMENTALIST STRATEGY For medical doctors dealing with patients SYMPTOM
DIAGNOSIS
Make deliberate steps towards the stated objective
Measure and evaluate the effects of the steps
IMPLICATIONS FOR MANAGERS For engineers making product and process innovations
Given uncertainty, explore the implications of a range of possible future trends
DESIGN DEVELOPMENT TEST
THE PRACTICE OF CORPORATE STRATEGY
TREATMENT
ADJUST DIAGNOSIS
DESIGN ADJUST TREATMENT
CURE
Adjust (if necessary) the objective and decide on the next step
NEVER FULLY REPRODUCIBLE…
RETEST
1. Requires a critical reading of the evidence underlying any claims to have identified the factors associated with management success 2. Requires a careful comparison of the context of successful management practice, with the context of the firm, industry, technology and country in which the practice might be reused
Encourage the use of multiple sources of information, debate and skepticism
Expect to change strategies in the light of new evidence
OPERATE
LEARNING FROM THE EXPERIENCE AND ANALYSIS
Ensure broad participation and informal channels of communication
THE ‘FIVE FORCES’ DRIVING INDUSTRY COMPETITION 1. 2. 3. 4. 5.
Relations with suppliers Relations with buyers New entrants Substitute products Rivalry amongst established firms
The goal of competitive strategy is to find a position in an industry where a company can best defend itself against these competitive forces or can influence them in its favour
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PORTER’S MARKET STRATEGIES
PORTER’S GENERIC TECHNOLOGY STRATEGIES
INNOVATION ‘LEADERSHIP’
INNOVATION ‘FOLLOWERSHIP’
Being first to the market
Being late to market, based on imitating from the experience of technological leaders
Requires a strong corporate commitment to creativity and risktaking, with close linkages both to major sources of relevant new knowledge, and to the needs and responses of customers
Requires a strong commitment to competitor analysis and intelligence, to reverse engineering and to cost cutting and learning in manufacturing
Source: Bessant, Tidd, 2013
STRATEGIES FOR LATE-ENTRANTS STRATEGY BASED ON COMPETENCIES OTHER THAT R&D AND NEW PRODUCT DEVELOMPENT
BENCHMARKING The process of comparing one's business processes and performance metrics to industry bests or best practices from other companies
STRATEGY FOCUSED ON MAJOR NEW PRODUCT DEVELOMPMENT PROJECTS
Questions to answer about own vs competitors’ innovative resources: • How do they compare in terms of size and composition? • How efficiently are they used? • How effectively do we learn from their knowledge and experience? • How do we maintain our own innovative advantages?
GOVERNMENTAL SUPPORT FOR INNOVATIVE ENTREPRENURSHIP DYNAMIC POLAND 2020: Actions that should be conducted for the Polish economy to become, in the 2020 perspective, innovative and resource-efficient
The establishment of a more businessfriendly environment
The reinforcement of various forms of financing R&D and innovations
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Increasing the quality of human capital for innovativeness
Strengthening the cooperation between entrepreneurs and science as well as between entrepreneurs themselves
Started in the 1980s when US firms found their loss of market share to Japanese firms, the best know and most influential has been the International Vehicle Programme at MIT in late 1980s Nowadays practiced widely; the most common in customerfacing areas and least common in product development and R&D Obtaining knowledge of how to replicate competitors’ product and process innovations typically costs between 60 and 70% of the original and typically takes 3 years to achieve
Ensuring entrepreneurshipfriendly regulatory and institutional environment
Investments, market expansion and improvement in the efficiency of enterprises
Encouraging innovativeness among entrepreneurs
The development of entrepreneurship and promotion of business change management
• Further elimination or change of regulations imposing excessive administrative, financial and reporting burdens – conducted on the basis of systematic revision of law • Simplification and ensuring transparency of the tax system through the rationalisation of tax reliefs, limitation of the number of regulations concerning VAT and the simplification • Further actions aimed to improve the functioning of the commercial judiciary by, among other things, making it possible to fully use modern technological solutions in the course of proceedings before the courts and popularising mediation in the settlement of commercial disputes • Prevention of bankruptcy of enterprises, as well as introduction and continuing application of the “new chance” policy by means of using early warning systems to prevent the occurrence of crisis situations in enterprises, facilitating the relaunch of business activity – the so-called new start, as well as amending the bankruptcy and restructuring law • Strengthening the socio-economic dialogue and increasing the activity of civil society institutions achieved by means of ensuring partnership relations between the administration and citizens, entrepreneurs and socio-economic partners • Reduction of costs of establishing and transforming enterprises
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Ensuring entrepreneurshipfriendly regulatory and institutional environment
• • • • • •
• •
Investments, market expansion and improvement in the efficiency of enterprises
Encouraging innovativeness among entrepreneurs
The development of entrepreneurship and promotion of business change management
Facilitation of access to capital for enterprises at all development stages Simplification of procedures for leveraging EU funds Popularisation of and support for the development of Public-Private Partnership (PPP), including simplification of regulations regarding implementation of projects Creation of a comprehensive and coherent system for the promotion of the Polish economy that would use available human and financial resources in an optimal manner to support the operation of Polish entrepreneurs abroad and to attract foreign investment to Poland Extension of the range of instruments supporting the activities of entrepreneurs aimed at the development of export activity Continuation of actions aimed at opening foreign markets to Polish products through the provision of useful information concerning the markets in question to Polish entrepreneurs, elimination of tariff and non-tariff barriers, as well as facilitating access to public procurement systems in third countries Continuation of actions aimed to increase the energy efficiency of the economy, including regulations pertaining to support mechanisms and leading to the achievement of measurable energy savings Increasing the use of energy from renewable energy sources
Ensuring entrepreneurshipfriendly regulatory and institutional environment
Investments, market expansion and improvement in the efficiency of enterprises
Encouraging innovativeness among entrepreneurs
The development of entrepreneurship and promotion of business change management
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Ensuring entrepreneurshipfriendly regulatory and institutional environment
• • •
• • • • • • • • • • •
Investments, market expansion and improvement in the efficiency of enterprises
Encouraging innovativeness among entrepreneurs
The development of entrepreneurship and promotion of business change management
More effective use of public funds earmarked for the financing of R&D Strengthening of the innovation policy at the regional level Formation of pro-innovation attitudes among entrepreneurs, in particular those from the SME sector, e.g. through educational programmes and initiatives aimed at the creation of a pro-innovative organisational culture – based on appropriate procedural flexibility, including skills such as the ability to cooperate with others or digital competences Rationalisation of the tax incentive scheme supporting the conduct of R&D activity Favouring market development: venture capital, business angels' network and seed capital funds, in particular with regard to investment in innovative companies at an early stage of development Support for the development and promotion of the idea of creating clusters, technology platforms and other cooperative relations between entrepreneurs as well as between enterprises and scientific institutions, aimed at the implementation of innovative projects Popularisation of intellectual property culture among entrepreneurs and support for the protection of property Development of the culture of academic innovative entrepreneurship Support for the mobility of personnel in the economy and in the scientific community Support for the development of human resources for an innovative and effective economy Stimulation of innovation by means of promoting the use of information and communication technologies and investment in these technologies Development of a modern and coherent system for the transfer of technology and commercialisation of knowledge Popularisation of advanced forms of international cooperation between Polish entrepreneurs and their foreign partners, dissemination of experience and cooperation patterns Development of the space industry in Poland, including providing support to Polish enterprises participating in the European Space Agency programmes
YOUTH ENTREPRENEURSHIP IN POLAND
• Improvement in the quality of operation of the business support institutions system in order to guarantee high quality of business services • Improvement of the functioning of the Polish administration through the implementation of systems ensuring appropriate quality of provided services and systematic personnel training • Further restriction of discretionary powers in the area of administrative decisions • Promotion of strategic management in enterprises • Promotion of corporate social responsibility, especially in the SME sector • Reinforcement of pro-environmental attitudes • Support for initiatives aimed at strengthening cooperation between entrepreneurs, which leads to more effective management, including the promotion of the role of collaboration, networks and informal alliances • Introduction of basic knowledge in the field of finance, accounting and economics to the curricula of upper-secondary schools • Popularisation of the idea of social economy and creation of conditions favouring the development of social enterprises
BARRIERS TO BUSINESS START-UP FOR YOUTH
POLICY RECOMMENDATIONS •
Lack of education on entrepreneurship
Lack loans for starting a business
•
• • • •
Administrative difficulties
Entrepreneurship education in schools - to provide young students with an opportunity to learn about entrepreneurship as a labour market activity and develop a positive attitude towards entrepreneurship; still not offered systemically in schools in Poland Entrepreneurship support and promotion in higher education - no link between current research on entrepreneurship and teaching due to a lack of researchers in that discipline Entrepreneurship training for youth outside of formal education Mentoring Entrepreneurial networks - provide access to resources and ideas that can improve their chances of survival and success
• • • • • • • •
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Create a national entrepreneurship education system at primary, secondary and postsecondary schools, co-ordinated by the Ministry of Education and for universities by the Ministry of Science and Higher Education Develop the concept of entrepreneurship education within a Polish context and make links to innovation policies Develop teaching modules for entrepreneurship education in schools and higher education by partnering with institutions in other countries to learn from their experience Provide entrepreneurship training for teachers at primary and secondary schools within regular teaching studies and also as continuous professional development, including international internships Provide opportunities for entrepreneurship training to university professors, university staff and youth workers Use active and innovative teaching methods that will bring closer the reality of the business. Involve the business community in entrepreneurship teaching as lecturers and mentors and in entrepreneurship projects for students Conduct regular surveys on the outcomes of entrepreneurship education Use the ESF to build a network of coaches and mentors to support youth entrepreneurs. Limit this support to one year to avoid a relationship of dependency Promote entrepreneurship and self-employment to students through workshops, conferences and business competitions. Identify youth entrepreneurship role models and build promotion campaigns around these success stories. Use success stories of young entrepreneurs so that youth can relate to them more easily
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BARRIERS TO BUSINESS START-UP FOR YOUTH Lack of education on entrepreneurship
Lack loans for starting a business
Information about financing: poorly disseminated information about the financial institutions and investors; low quality of staff who interact with entrepreneurs; low quality of information available on websites; and information that is too dispersed • Grants (The Labour Fund intended for unemployed, grants for start-ups, grants for groups who face the greatest difficulties in the labour market) •
• •
Administrative difficulties
Repayable instruments (83 programmes, funds or schemes) Equity (31 venture capital funds that invest in innovative business projects)
BARRIERS TO BUSINESS START-UP FOR YOUTH Lack of education on entrepreneurship
Lack loans for starting a business
Administrative difficulties
• Regulatory environment (especially hard for youth because of lower levels of entrepreneurship skills and less experience in the labour market) • Entrepreneurship culture (low level of interest in entrepreneurship and self-employment – characteristic of a country that doesn’t promote creativity, innovation, risktaking) • Information about business start-up • Availability of e-services for youth entrepreneurs
THE BUSINESS PLANNING Tell a story. The story of your business. The business planning is primarily used for raising capital The primary purpose of the process is to help entrepreneurs gain a deeper understanding of the opportunity they are envisioning
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POLICY RECOMMENDATIONS • Provide more and higher quality information on acquiring financing and investments for business start-up. • Focus on improving the completeness of information provided online and make links to other entrepreneurship support programs such as training, coaching and mentoring and business advisory services • Continue to shift towards the use of repayable instruments and away from grants • Continue to support the development of the microfinance industry, which is traditionally one of the most important sources of financing for youth, especially for disadvantaged youth and those with low-tech business ideas that require small sums of start-up capital • Introduce some flexibility into the lending rules: • The possibility to postpone payments for a certain period • The possibility of increasing the amount of the loan in the first year of operation, taking into account changes in the interest rate of the new amount
POLICY RECOMMENDATIONS • Scale-up efforts to promote a positive image of entrepreneurs and positive attitudes towards entrepreneurship using success stories and role models. Focus efforts in education to reach a wide audience of youth. Inspire youth by using examples of young entrepreneurs that youth can relate to • Promote entrepreneurship to youth with different information channels, including wide campaigns by the Ministry of Economy, as well as through schools, student events and conferences, and non-governmental organisations • Aim to stimulate bottom-up support for youth entrepreneurship by supporting youth entrepreneurship clubs with small amounts of financing • Improve awareness of existing entrepreneurship supports among youth by targeting awareness efforts for different groups within the youth population • Continue efforts to simplify the taxation and social insurance system • Continue to increase a number of online services for business to assist youth entrepreneurs in meeting their legal obligations
BENEFITS OF BUSINESS PLANNING 1. Allows the entrepreneur to articulate the business opportunity to various stakeholders in the most effective manner 2. Provides the validation needed to convince potential employees to leave their current jobs for the uncertain future of a new venture 3. Can help secure a strategic partner, key customer or supplier
‘‘The key to understanding your business opportunity is to get out there and talk to people... people who sell, distribute, make and use similar products — most importantly, the customer. Writing a business plan without this groundwork leads to assumptions that may not hold water. There’s not much room for error in your key assumptions and this field research helps validate those assumptions.’’ Jim Poss, Founder and CEO of the BigBelly Solar
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well-publicized themes. When you hear their taglines, you instantly gain insight into the businesses. For example, when you hear ‘‘absolutely, positively has to be there overnight,’’ most people think of Federal Express (FedEx) and package delivery. On top of that, they think of reliability, which is the quality FedEx wants to embody in the minds of its customers. Similarly, ‘‘Just do it’’ is intricately linked to Nike and the image of athletic excellence (see Figure 7.2). A tagline is a sentence, or even a fragment of a sentence, that summarizes the essence of your business. It’s the theme that every sentence, paragraph, page, and diagram in your business plan should adhere to—the unifying idea of your story. One useful tip is to put your tagline in a footer that runs on the bottom of every page. As you are writing, if the section doesn’t build on, explain, or otherwise directly relate to the tagline, it most likely isn’t a necessary component to the business plan. Rigorous adherence to the tagline facilitates writing a concise and coherent business plan. You might also want to put your tagline on your business card, company letterhead, and other collateral material you develop for the business. It’s a reminder to you and your team about what you are trying to accomplish as well as an effective marketing tactic that helps build your brand. Now let’s take another look at the major sections of the plan (refer back to Figure 7.1). Remember that, although there are variations, most planning processes will include these components. It is important to keep your plan as close to this format as possible because many stakeholders are accustomed to this format and it facilitates spot reading. If you are seeking venture capital, for instance, you want to make quick reading possible because venture capitalists often TAGLINES spend as little as five minutes on a plan before rejecting it or putting it aside
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THE BUSINESS PLANNING Entrepreneurs are continuously updating and revising their business plan—most business plans are obsolete the day they come off the presses
Just do it! Absolutely, positively has to be there overnight I’m lovin’ it. Discover all that’s possible on the internet Where do you want to go today Always low prices. Always!
Nike................... FedEx................... McDonald’s................... Cisco Systems...................
The plan articulates the vision for the company, and it crystallizes that vision for entrepreneur and the entrepreneur's team
Microsoft................... Walmart...................
F i g u r e 7.2
Business plans provides a history of a business
Source: Bygrave, Zacharakis, 2009
Taglines
BUSINESS PLAN OUTLINE
A SHORT SUMMARY • Provides a road map for the entrepreneur and others to follow
I. Cover
II. Executive Summary
III. Table of Contents
IV. Industry, Customer, and Competitor Analysis
V. Company and Product Description
VI. Marketing Plan
VII. Operations Plan
VIII. Development Plan
IX. Team
X. Critical Risks
XI. Offering
XII. Financial Plan
XIII. Appendices
• Can be shared with co-founders, family members, and trusted advisors • It’s good to ask for a feedback that will provide a platform for the entrepreneur to attack each of the major areas important to launching and running a new venture
Company name, tagline, contact person, address, phone, e-mail, date, copy number
BUSINESS PLAN OUTLINE I. Cover
VI. Marketing Plan
EXECUTIVE SUMMARY
II. Executive Summary
III. Table of Contents
IV. Industry, Customer, and Competitor Analysis
V. Company and Product Description
VII. Operations Plan
VIII. Development Plan
IX. Team
X. Critical Risks
XII. Financial Plan
XIII. Appendices
An example: The current market for widgets is $50 million, growing at an annual rate of 20%. Moreover, the emergence of mobile applications is likely to accelerate this market’s growth. Company XYZ is positioned to capture this wave with its proprietary technology: the secret formula VOOM.
Provide information about subsections: • Description of Opportunity Business Concept
XI. Offering
• Industry Overview • Target Market
Highlights the potential of the opportunity
• Competitive Advantage Business Model and Economics Team and Offering • Financial Snapshot
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BUSINESS PLAN OUTLINE
BUSINESS PLAN OUTLINE
I. Cover
II. Executive Summary
III. Table of Contents
IV. Industry, Customer, and Competitor Analysis
V. Company and Product Description
I. Cover
II. Executive Summary
III. Table of Contents
IV. Industry, Customer, and Competitor Analysis
V. Company and Product Description
VI. Marketing Plan
VII. Operations Plan
VIII. Development Plan
IX. Team
X. Critical Risks
VI. Marketing Plan
VII. Operations Plan
VIII. Development Plan
IX. Team
X. Critical Risks
XI. Offering
XII. Financial Plan
XIII. Appendices
XI. Offering
XII. Financial Plan
XIII. Appendices
Should include major sections, subsections, exhibits, appendices
BUSINESS PLAN OUTLINE
INDUSTRY, CUSTOMER, COMPETITION • The current and future market size – described in terms of revenues, growth and future trends that are accurate • Dry analyses are expected with the goal of highlighting a space or gap that is underserved • Identify the segment your product will target
INDUSTRY
CUSTOMER
COMPETITION
• Definition of the customer made by using demographic and psychographic information • Identify the customers by address, phone number, e-mail or even include letters of interest or intent from key customers who express a willingness to buy the product
• Using the competitive profile matrix – comparing different product features and attributes that each competitor uses to differentiate itself from others • The best source of information is your network and trade shows
BUSINESS PLAN OUTLINE I. Cover
II. Executive Summary
III. Table of Contents
VI. Marketing Plan
VII. Operations Plan
VIII. Development Plan
XI. Offering
XII. Financial Plan
XIII. Appendices
I. Cover
II. Executive Summary
III. Table of Contents
IV. Industry, Customer, and Competitor Analysis
V. Company and Product Description
VI. Marketing Plan
VII. Operations Plan
VIII. Development Plan
IX. Team
X. Critical Risks
XI. Offering
XII. Financial Plan
XIII. Appendices
• Introduction with the company name and include brief overview of the concept for the company • Product and its differentiating features with the prove that it creates value for the customers and shows where’s its advantage (technology, patents, distribution...) • Vision for the company’s long-term growth potential
MARKETING PLAN IV. Industry, Customer, and Competitor Analysis
V. Company and Product Description
TARGET MARKET STRATEGY
PRODUCT/SERVICE STRATEGY
IX. Team
X. Critical Risks
• Based on the knowledge from the customer analysis • Helps to decide where the product fits
PRICING STRATEGY
DISTRIBUTION STRATEGY
COMMUNICATIONS STRATEGY
SALES STRATEGY
The strategy that will allow the company to reach its potential SALES AND MARKETING FORECASTS
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Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 2
MARKETING PLAN TARGET MARKET STRATEGY
PRODUCT/SERVICE STRATEGY
PRICING STRATEGY
DISTRIBUTION STRATEGY
COMMUNICATIONS STRATEGY
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MARKETING PLAN • Describes how the company will differentiate the product from the competition • A customer profile matrix can be created – it illustrates how the firm compares to the competition • Information about services provided to the customers should be included
SALES STRATEGY
TARGET MARKET STRATEGY
PRODUCT/SERVICE STRATEGY
PRICING STRATEGY
DISTRIBUTION STRATEGY
COMMUNICATIONS STRATEGY
SALES STRATEGY
SALES AND MARKETING FORECASTS
SALES AND MARKETING FORECASTS
MARKETING PLAN
MARKETING PLAN
TARGET MARKET STRATEGY
TARGET MARKET STRATEGY
PRODUCT/SERVICE STRATEGY
PRODUCT/SERVICE STRATEGY
PRICING STRATEGY
DISTRIBUTION STRATEGY
PRICING STRATEGY
The key is to identify appropriate channels and assess how costly it is to reach them
COMMUNICATIONS STRATEGY
DISTRIBUTION STRATEGY
COMMUNICATIONS STRATEGY
SALES STRATEGY
SALES STRATEGY
SALES AND MARKETING FORECASTS
SALES AND MARKETING FORECASTS
MARKETING PLAN
MARKETING PLAN
TARGET MARKET STRATEGY
PRODUCT/SERVICE STRATEGY
PRICING STRATEGY
PRICING STRATEGY
DISTRIBUTION STRATEGY
DISTRIBUTION STRATEGY
COMMUNICATIONS STRATEGY
SALES AND MARKETING FORECASTS
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• Communicating effectively is expensive, that’s why entrepreneurs need to carefully select the appropriate strategies
TARGET MARKET STRATEGY
PRODUCT/SERVICE STRATEGY
SALES STRATEGY
• Setting prices helps to determine what the perceived value for your product is • Innovative products should be prices above market rated
COMMUNICATIONS STRATEGY
• Illustrates what kind and level of human capital will need to be devoted to the effort
SALES STRATEGY
SALES AND MARKETING FORECASTS
• Show projections of revenues into the future • The comparable method models the sales forecast after what other companies have achieved • The build-up method identifies all the possible revenue sources of the business and estimates how much of each type of revenue the company can generate during a given period of time
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BUSINESS PLAN OUTLINE
OPERATIONS PLAN
I. Cover
II. Executive Summary
III. Table of Contents
IV. Industry, Customer, and Competitor Analysis
VI. Marketing Plan
VII. Operations Plan
VIII. Development Plan
IX. Team
XI. Offering
XII. Financial Plan
V. Company and Product Description
X. Critical Risks
OPERATIONS STRATEGY
• A strategy overview • The geographical location of production facilities • Description of facilities to buy or lease
SCOPE OF OPERATIONS
• The production process • Partnership with vendors, suppliers, partners • Helps identify staffing needs
ONGOING OPERATIONS
• Details on day-to-day activities
XIII. Appendices
How operations will add value for the customers
BUSINESS PLAN OUTLINE
DEVELOPMENT PLAN
I. Cover
II. Executive Summary
III. Table of Contents
IV. Industry, Customer, and Competitor Analysis
V. Company and Product Description
DEVELOPMENT STRATEGY
DEVELOPMENT TIMELINE
VI. Marketing Plan
VII. Operations Plan
VIII. Development Plan
IX. Team
X. Critical Risks
Detailing the necessary work and what needs to happen for the entrepreneur to consider the work successful helps to understand and manage the risks involved
A schedule that entrepreneur uses to highlight major milestone and to monitor progress and make changes
XI. Offering
XII. Financial Plan
XIII. Appendices
Highlights the development strategy and provides a detailed development timeline
BUSINESS PLAN OUTLINE I. Cover
VI. Marketing Plan
XI. Offering
II. Executive Summary
VII. Operations Plan
XII. Financial Plan
III. Table of Contents
VIII. Development Plan
TEAM IV. Industry, Customer, and Competitor Analysis
V. Company and Product Description
IX. Team
X. Critical Risks
ADVISORY BOARDS, BOARD OF DIRECTORS, STRATEGIC PARTNERS, EXTERNAL MEMBERS
COMPENSATION AND OWNERSHIP
The identification of the key team members and their titles
Creating a team with diverse skills and experience
A table listing key team members by role, compensation, and ownership equity
The key is to convince the investors that the entrepreneur have assembled the best team possible and that team can execute on the brilliant concept
Industry experts provide legitimacy to the new business as well as strong technical advice
A prove that the compensation is appropriate
XIII. Appendices
This section identifies the members responsible for key activities and conveys why they are exceptionally qualified to execute on those responsibilities; helps to consider how well the group of individuals will work together
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TEAM BIOS AND ROLES
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BUSINESS PLAN OUTLINE I. Cover
II. Executive Summary
III. Table of Contents
VI. Marketing Plan
VII. Operations Plan
VIII. Development Plan
XI. Offering
XII. Financial Plan
XIII. Appendices
CRITICAL RISKS IV. Industry, Customer, and Competitor Analysis
V. Company and Product Description
IX. Team
X. Critical Risks
Market Interest and Growth Potential • It’s difficult to gauge overall demand until the product hits the market • The possible plan: tactics and contingencies the company will undertake
Competitor Actions and Retaliation
The plan needs to acknowledge these potential risks – otherwise, investors will believe that the entrepreneur is naive or untrustworthy and may possibly withhold investment. The key is to identify the risk and then state the possibility plan
Time and Cost of Development Operating Expenses Availability and Timing of Financing
CRITICAL RISKS
CRITICAL RISKS
Market Interest and Growth Potential
Market Interest and Growth Potential
Competitor Actions and Retaliation
Competitor Actions and Retaliation
• Many entrepreneurs underestimate competition • The possible plan: the venture has room in its gross margins to operate at lower-than-anticipated price levels and the cash available to withstand and fight back against attacks
Time and Cost of Development
Time and Cost of Development • Many factors can delay and add to the expense of developing the product • The possible plan: product is able to be developed on time and on budget by using alternative strategies
Operating Expenses
Operating Expenses
Availability and Timing of Financing
Availability and Timing of Financing
CRITICAL RISKS
CRITICAL RISKS
Market Interest and Growth Potential
Market Interest and Growth Potential
Competitor Actions and Retaliation
Competitor Actions and Retaliation
Time and Cost of Development
Time and Cost of Development
Operating Expenses • Operating expenses have a way of growing beyond expectations • The possible plan: way of forecasting the expenses and laying out the contingency plans for unexpected developments
Availability and Timing of Financing
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Operating Expenses Availability and Timing of Financing • Difficulties obtaining financing: equity and debt • The possible plan: identifying viable alternative sources of capital and strategies to slow the “burn rate”
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Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 2
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BUSINESS PLAN OUTLINE
BUSINESS PLAN OUTLINE
I. Cover
II. Executive Summary
III. Table of Contents
IV. Industry, Customer, and Competitor Analysis
V. Company and Product Description
I. Cover
II. Executive Summary
III. Table of Contents
IV. Industry, Customer, and Competitor Analysis
V. Company and Product Description
VI. Marketing Plan
VII. Operations Plan
VIII. Development Plan
IX. Team
X. Critical Risks
VI. Marketing Plan
VII. Operations Plan
VIII. Development Plan
IX. Team
X. Critical Risks
XI. Offering
XII. Financial Plan
XIII. Appendices
XI. Offering
XII. Financial Plan
XIII. Appendices
The sources section details how much capital is needed and the types of financing The uses section details how the money are going to be spent
Although an accountant can be hired for this section, the lead entrepreneur needs to understand the numbers inside and out
FINANCIAL PLAN
BUSINESS PLAN OUTLINE
THE INCOME STATEMENT
THE STATEMENT OF CASH-FLOWS
THE BALANCE SHEET
Describes how well a company conducted its business over a recent period of time
Transactions that involve cash
The company’s assets, liabilities, and shareholder equity
Begins with the company’s revenues on the top line and ends with the bottom line of the company’s profits
Cash flow starts with the bottom line (profits) of the income statement and works backward, removing all the noncash transactions
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The sum of the asset accounts must equal the sum of the liabilities and shareholder equity account
I. Cover
II. Executive Summary
III. Table of Contents
IV. Industry, Customer, and Competitor Analysis
V. Company and Product Description
VI. Marketing Plan
VII. Operations Plan
VIII. Development Plan
IX. Team
X. Critical Risks
XI. Offering
XII. Financial Plan
XIII. Appendices
Anything and everything that adds further validation to the concept but that doesn’t fit or is too large to insert in the main parts of the plan
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